Yesterday was the first trading session where the major stock indexes finished strong into the close since August 3, 2011. The Dow Jones Industrial Average finished higher by over 400.0 points by the closing bell. Is this move yesterday just an oversold bounce, or was it the start of a major bottom? These are the questions that many traders and investors are asking themselves. This morning, the S&P 500 Index e-mini futures (ES U1) are trading lower by 13.50 points to 1158.00 per contract. The catalyst for the decline this morning is still the same, U.S. debt and the European debt crisis.
Gold is trading higher again this morning by 21.0 points to $1764.00 an ounce. As long as these problems remain gold could continue to trade higher despite the precious metal being severely overbought. The problems in the world at this time do not look as if they will be solved anytime soon.
The Asian markets rallied higher last night, however, the gains were minimal compared to the recent declines. The Hang Seng (Hong Kong) was the big winner last night finishing higher by 2.34 percent. While there was a bounce in Asia, the move higher has been rather weak considering the U.S. markets rallied by 5.0 percent. The Shanghai Index (China) finished higher by 0.91 percent. This move is really not very impressive considering the Shanghai Index is the most important index in Asia.
WTI oil is climbing higher this morning by $2.59 to $2.55 to $81.80 per barrel. Traders should watch for extreme volatility in crude especially if the U.S. Dollar Index bounces higher throughout the day. WTI crude is likely to pullback if the major stock indexes continue to decline throughout the trading session.
Traders should expect another volatile trading as the major stock market indexes are not out of the woods. The problems in Europe seem to be getting worst by the day and there is really no end in sight. QE-3 rumors are circulating across Wall Street, however, yesterday the Fed did not indicate they would be doing another quantitative easing program. The Federal Reserve did indicate that they would keep the Fed funds rate at zero to a quarter percent until 2013.